Extract to table

Statement of the Legal Issue IRC § 355(e)(1) provides that if a distribution to which § 355(a) applies is part of a "plan (or series of related transactions)" pursuant to which one or more persons acquire directly or indirectly stock representing a 50-percent or greater interest (within the meaning of IRC § 355(d)(4)) in the distributing corporation or any controlled corporation, then the distributing corporation shall recognize gain on the distribution as if the stock of the controlled corporation were sold at its fair market value on the date of the distribution

The regulations emphasize that no single factor is determinative and that the analysis must take into account the totality of the relevant facts and circumstances

The analysis must proceed to the specific facts and circumstances

However, the factual record on this critical point is thin and must be substantially supplemented before Safe Harbor II can be confirmed

If Safe Harbor II cannot be confirmed — for example, because the documentary record reveals pre-acquisition discussions about a potential spin-off — the analysis must proceed under the general facts-and-circumstances test, which entails greater uncertainty and risk